| Add to balance / Manage account | User: | Log out |
| Prospect News home > News index > List of issuers Review > Headlines for 2017 > News item |
European CLO primary supply forecast to slow in second half of year; U.S. spreads flat
By Cristal Cody
Tupelo, Miss., July 10 – European CLO refinancing action remains steady, though new issuance is forecast to decline over the remainder of the year.
“While we expect refinancing activity to remain busy, particularly as equity investors in late 2015 vintage deals start to refinance their relatively expensive coupons, we think new issuance activity may slow in the second half of the year,” BofA Merrill Lynch analysts said in a note released on Monday.
More than €8 billion of new euro-denominated CLOs have priced year to date, while more than €13 billion of vintage CLOs have been refinanced or reset in the first six months of the year, according to the note.
BofA Merrill Lynch analysts in June raised their U.S. CLO new issue forecast to $90 billion from $60 billion for the year but said the forecast for European supply remains unchanged at €15 billion for 2017.
In the secondary market, U.S. CLO spreads ended Friday flat on the week, according to the BofA Merrill Lynch note. AAAs were unchanged at Libor plus 115 basis points. CLO BB-rated notes were flat at Libor plus 550 bps.
“The U.S. CLO secondary market was muted during this Fourth of July week with barely any bonds up for bidding,” BofA Merrill Lynch analysts said.
Secondary market volume was thin over the week. On Friday, $62.65 million of high-grade CBO/CDO/CLO issues and $69.17 million of non-high-grade securities were traded, according to Trace.
European CLO secondary trading was “fairly active” over the past week and spreads firmed, according to BofA Merrill Lynch.
“In the debt tranches, lower mezzanine spreads tightened over the week, with BB and single B spreads tightening by around 15 bps,” the analysts said.
European CLO AAAs were flat on the week at Euribor plus 90 bps. BBs ended Friday 15 bps tighter at Euribor plus 525 bps.
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.